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10 Tools for Tax Document Automation

Special Feature

From the July 2010 Issue

When I was approached by the editorial staff at CPATA to write an article
on tax document automation, I immediately accepted the assignment. It wasn’t
until I began to write this that I realized all of the different opportunities
that exist for today’s tax practitioner to automate their tax documents.
To help organize the discussion, I thought a practical way to approach it would
be to identify the top 10 things to do to automate your tax documents through
the four key stages of their life cycle: capturing, processing, storing and

Tax Document Automation Vendors

Before we begin our review of the 10 steps to tax document automation, I think
this provides a good opportunity to answer one of the most frequently asked
questions I receive about tax and accounting technology: “Why should I
go paperless?” Well this review of tax document automation goes a long
way towards answering that question. In order to take advantage of all the automation
techniques we are going to review, you have to have your documents converted
to a digital format, aka paperless. So keep that in mind as you review these
techniques to improve the efficiency of your tax prep process with document


One of the best ways to automate tax documents is to eliminate handling
as many of them as possible. This can be facilitated by making an organizer
available to your clients to enter their tax document information online.
Assuming you utilize a tax organizer that is an extension of the tax prep
software, you can eliminate the need to capture many of the supporting documents
into your workflow. For those that you do need to see, work towards having
the client scan the documents on their end and upload them through your client
portal (#8.) I realize that many practitioners have a hard time getting clients
to use the organizers, but I don’t think you should give up on this.
With the use of web conferencing (#10) and portal technology, the opportunity
to enhance the online organizer experience continues to improve.

One of the most time-consuming aspects of getting a tax return prepared
is getting all the supporting documents gathered and organized in order to
commence with the preparation process. There are a number of “scan and
organize” solutions available to automate the tax document scanning
process. The nature of these applications is to allow you to create a scanned
file of all of a client’s 1040 documents without taking any time to
organize them. The scan and organize software is designed to automatically
recognize the different types of documents: W-2s, 1099s, brokerage statements,
K-1s and more. These documents will be sorted in the appropriate sequence
to facilitate the tax prep process. The documents will also be bookmarked
automatically in a PDF file, which is a real timesaver and provides an excellent
opportunity to establish a methodology for organizing the tax documents consistently
across your firm. There are scan and sort software applications that you can
install on premise, like traditional software applications, or you can subscribe
to a web hosted SaaS (software as a service) solution.

As mentioned in the introduction, in order to automate your tax documents,
you have to get them into a digital format. There are two ways to accomplish
this; convert them from paper via scanning process or capture the original
documents electronically. The latter is the more efficient approach, and this
can be done by using a PDF print driver. If you’re not familiar with
this concept, this is a special type of printer option that lets you print
from any Windows application directly to a PDF format. That means the document
originates in PDF format instead of as a paper document. The most popular
PDF print driver software is Adobe Acrobat; however, there are many alternative
solutions from which to choose. Many document management systems (#7) include
a PDF print driver.

We previously discussed scan and organize software. Scan and fill takes the
concept one very important step further. With this software, the actual data
on the scanned tax documents can be recognized and automatically transferred
to the tax prep software. That means you can have “hands free”
transfer of data directly from an original paper document into the tax software
as a result of the scanning process. You can’t get much more automated
than that.

When you are working with electronic tax documents, the last thing you want
to do is print them to paper while you process the engagement just so that
you can annotate them. Instead, you need to have the tools at your disposal
to annotate them electronically with review notes, tick marks, stamps, signatures
and more. Adobe Acrobat provides all of this functionality, as well as the
ability to secure and encrypt your PDF files to help you comply with the ever-growing
list of information privacy regulations.

I wrote an article on the nature and purpose of workflow software in last
month’s issue of CPATA (also available online at
The point to make here is that one aspect of tax document processing that
will benefit from automation is the ability to automate the movement of those
documents throughout your office as it flows through the tax prep engagement.
Workflow software is designed to do just that by creating a virtual workpaper
binder to manage the routing of engagement files, including direct links to
the digital source documents, staff assignments, electronic routing sheets,
checklists, review notes and more.

The discussion of tax document automation typically gravitates towards a reference
to scanned documents; however, it is important to realize that an increasing
proportion of tax documents are based in other types of electronic files.
Examples include Excel and Word files, e-mail messages and their PDF file
attachments. A DMS solution provides a foundation for managing the storage
of all of your electronic tax files to facilitate quick retrieval and consistent
organization. The traditional Windows Explorer folder/sub-folder model is
being pushed to the limits as we find ourselves navigating ever deeper to
get to a single document. A document management system not only provides better
organization and retrieval capabilities; it also allows you to secure your
files and to integrate with workflow software (#6) and a client portal (#8.)

An important part of the tax document process is the exchange of documents
and files with clients. A client portal automates both sides of the exchange
process by publishing documents and other files to a secure website for viewing,
printing and downloading by the client. In addition, many portal solutions
allow clients the ability to upload files such as scanned documents, QuickBooks
files, etc. An effective client portal solution should be integrated directly
with the DMS to streamline the file exchange process. There are many alternative
portal solutions ranging from simple to complex and cheap to expensive. Client
portals have gained significant momentum in the accounting and tax services
marketplace. One of the primary drivers for this increase in demand is the
role that a client portal can play in helping you comply with the growing
array of information privacy regulations.

Online faxing systems have been around for more than 20 years, but ironically,
most tax practitioner were loathe to embrace this technology and preferred
to print documents to paper and transmit them through the fax machine. Ultimately,
the rapid rise in the use of e-mail to exchange information substantially
reduced the volume of faxing. However, there are still some practitioners
who prefer to fax, and many clients who do, as well. Utilizing an online fax
system provides a win-win solution for those situations. It allows you to
eliminate paper on both sides of the exchange. Your outbound faxes can be
sent directly through a fax print driver, similar to the PDF print driver
(#3). Inbound faxes can come into your e-mail inbox as PDF attachments, which
can then be transferred directly to your DMS. If you are still doing a significant
amount of paper faxing, you owe it to yourself to pursue an online faxing

This is an initiative that is just beginning to emerge as an invaluable weapon
in the tax document automation journey. Web conferencing allows you to review
documents, as well as software applications, online and in real time with
two or more participants from remote locations. If you think about the amount
of time and effort that goes into sending or receiving information from a
client for review, any opportunity to reduce that can pay big dividends. Web
conferencing can be used to coach a client on how to enter data into an online
organizer (#1) and to review a draft of a tax return quickly before it is
finalized. If you haven’t experimented with this easy-to-use and relatively
inexpensive tool, I strongly recommend that you do so. The value proposition
will become evident very quickly.

These 10 steps to automate your tax documents aren’t listed in order
of priority, although some of the initiatives are more easily accomplished if
others are in place. The key to success with these is to identify your priorities
and begin implementing those that will provide the highest return first. It’s
also not a bad idea to cherry pick a couple of the easier initiatives to give
a feeling of success to gain some momentum in your quest for a digital practice

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